Prohibiting Foreign Adversary Interference in Cryptocurrency Markets Act

II 118TH CONGRESS 1ST SESSION S. 1870 To amend the Commodity Exchange Act to prohibit interference in United States digital commodity markets by entities organized or established in a foreign adversary, and for other purposes. IN THE SENATE OF THE UNITED STATES JUNE 7, 2023 Mr. TUBERVILLE (for himself and Mrs. GILLIBRAND) introduced the following bill; which was read twice and referred to the Committee on Agriculture, Nutrition, and Forestry A BILL To amend the Commodity Exchange Act to prohibit inter- ference in United States digital commodity markets by entities organized or established in a foreign adversary, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Prohibiting Foreign 4 Adversary Interference in Cryptocurrency Markets Act’’. 5 VerDate Sep 11 2014 23:27 Jun 26, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S1870.IS S1870 pbinns on DSKJLVW7X2PROD with $$_JOB 2 •S 1870 IS SEC. 2. PROHIBITION ON REGISTRATION OF FOREIGN AD- 1 VERSARY-AFFILIATED DIGITAL COMMODITY 2 PLATFORMS. 3 Section 4(b) of the Commodity Exchange Act (7 4 U.S.C. 6(b)) is amended by adding at the end the fol- 5 lowing: 6 ‘‘(3) PROHIBITION ON REGISTRATION OF FOR- 7 EIGN ADVERSARY-AFFILIATED DIGITAL COMMODITY 8 PLATFORMS.— 9 ‘‘(A) DEFINITIONS.—In this paragraph: 10 ‘‘(i) COVERED ENTITY.—The term 11 ‘covered entity’ means— 12 ‘‘(I) an entity that is established 13 or organized under the laws of, or the 14 principal place of business of which is 15 located in, a foreign adversary; or 16 ‘‘(II) any subsidiary owned (in 17 whole or in part) or operated by an 18 entity described in subclause (I). 19 ‘‘(ii) DIGITAL COMMODITY.— 20 ‘‘(I) IN GENERAL.—The term 21 ‘digital commodity’ means a fungible 22 digital form of personal property that 23 can be possessed and transferred per- 24 son-to-person without necessary reli- 25 ance on an intermediary. 26 VerDate Sep 11 2014 23:27 Jun 26, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S1870.IS S1870 pbinns on DSKJLVW7X2PROD with $$_JOB 3 •S 1870 IS ‘‘(II) INCLUSIONS.—The term 1 ‘digital commodity’ includes property 2 commonly known as cryptocurrency or 3 virtual currency. 4 ‘‘(III) EXCLUSIONS.—The term 5 ‘digital commodity’ does not include— 6 ‘‘(aa) an interest in a phys- 7 ical commodity; 8 ‘‘(bb) a security; 9 ‘‘(cc) a digital form of cur- 10 rency backed by the full faith 11 and credit of the United States; 12 or 13 ‘‘(dd) any other instrument 14 that the Commission determines 15 not to be a digital commodity. 16 ‘‘(iii) DIGITAL COMMODITY 17 BROKER.— 18 ‘‘(I) IN GENERAL.—The term 19 ‘digital commodity broker’ means a 20 person that is engaged, as an identifi- 21 able business, in— 22 ‘‘(aa) soliciting or accepting 23 orders on behalf of another per- 24 VerDate Sep 11 2014 23:27 Jun 26, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S1870.IS S1870 pbinns on DSKJLVW7X2PROD with $$_JOB 4 •S 1870 IS son for a digital commodity 1 trade; 2 ‘‘(bb) accepting digital com- 3 modities from another person for 4 the purpose of entering into dig- 5 ital commodity trades; 6 ‘‘(cc) arranging digital com- 7 modity trades on behalf of an- 8 other person; or 9 ‘‘(dd) a similar activity, as 10 determined by the Commission. 11 ‘‘(II) EXCLUSION.—The term 12 ‘digital commodity broker’ does not 13 include a person solely because that 14 person validates digital commodity 15 transactions. 16 ‘‘(iv) DIGITAL COMMODITY CUSTO- 17 DIAN.—The term ‘digital commodity custo- 18 dian’ means a person that, as an identifi- 19 able business, maintains possession, cus- 20 tody, or control over digital commodities 21 on behalf of another person. 22 ‘‘(v) DIGITAL COMMODITY DEALER.— 23 VerDate Sep 11 2014 23:27 Jun 26, 2023 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S1870.IS S1870 pbinns on DSKJLVW7X2PROD with $$_JOB 5 •S 1870 IS ‘‘(I) IN GENERAL.—The term 1 ‘digital commodity dealer’ means a 2 person that— 3 ‘‘(aa) has an identifiable 4 business of dealing in a digital 5 commodity as principal for its 6 own account; 7 ‘‘(bb) makes a market in a 8 digital commodity; 9 ‘‘(cc) holds itself out as a 10 dealer in a digital commodity; 11 ‘‘(dd) has as an identifiable 12 business of buying or selling dig- 13 ital commodities for conversion 14 into other digital commodities, 15 currency, or other consideration; 16 ‘‘(ee) has as an identifiable 17 business of accepting digital com- 18 modities from another person (re- 19 ferred to in this item as a ‘de- 20 positor’) with an obligation to re- 21 turn the digital commodities, con- 22 sideration linked to the digital 23 commodities, or both to the de- 24 positor; or 25 VerDate Sep 11 2014 23:27 Jun 26, 2023 Jkt 039200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S1870.IS S1870 pbinns on DSKJLVW7X2PROD with $$_JOB 6 •S 1870 IS ‘‘(ff) engages in a similar 1 activity, as determined by the 2 Commission. 3 ‘‘(II) EXCLUSION.—The term 4 ‘digital commodity dealer’ does not in- 5 clude a person solely because that per- 6 son validates digital commodity trans- 7 actions. 8 ‘‘(vi) DIGITAL COMMODITY PLAT- 9 FORM.—The term ‘digital commodity plat- 10 form’ means a person that is 1 or more of 11 the following: 12 ‘‘(I) A digital commodity broker. 13 ‘‘(II) A digital commodity custo- 14 dian. 15 ‘‘(III) A digital commodity deal- 16 er. 17 ‘‘(IV) A digital commodity trad- 18 ing facility. 19 ‘‘(vii) DIGITAL COMMODITY TRADE.— 20 ‘‘(I) IN GENERAL.—The term 21 ‘digital commodity trade’ means a 22 purchase or sale of a digital com- 23 modity in exchange for— 24 VerDate Sep 11 2014 23:27 Jun 26, 2023 Jkt 039200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S1870.IS S1870 pbinns on DSKJLVW7X2PROD with $$_JOB 7 •S 1870 IS ‘‘(aa) another digital com- 1 modity; or 2 ‘‘(bb) any other consider- 3 ation. 4 ‘‘(II) INCLUSIONS.—The term 5 ‘digital commodity trade’ includes— 6 ‘‘(aa) an offer to enter into 7 a purchase or sale described in 8 subclause (I); and 9 ‘‘(bb) a loan of a digital 10 commodity, an offer to enter into 11 a loan of a digital commodity, or 12 a similar activity, as determined 13 by the Commission. 14 ‘‘(viii) DIGITAL COMMODITY TRADING 15 FACILITY.— 16 ‘‘(I) IN GENERAL.—The term 17 ‘digital commodity trading facility’ 18 means a trading facility that facili- 19 tates the execution or trading of dig- 20 ital commodity trades between per- 21 sons. 22 ‘‘(II) EXCLUSION.—The term 23 ‘digital commodity trading facility’ 24 does not include a person solely be- 25 VerDate Sep 11 2014 23:27 Jun 26, 2023 Jkt 039200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S1870.IS S1870 pbinns on DSKJLVW7X2PROD with $$_JOB 8 •S 1870 IS cause that person validates digital 1 commodity transactions. 2 ‘‘(ix) FOREIGN ADVERSARY.—The 3 term ‘foreign adversary’ means— 4 ‘‘(I) the People’s Republic of 5 China, including the Hong Kong Spe- 6 cial Administrative Region and Macao 7 Special Administrative Region; 8 ‘‘(II) the Republic of Cuba; 9 ‘‘(III) the Islamic Republic of 10 Iran; 11 ‘‘(IV) the Democratic People’s 12 Republic of Korea; 13 ‘‘(V) the Russian Federation; 14 and 15 ‘‘(VI) the Bolivarian Republic of 16 Venezuela under the regime of Nicola´s 17 Maduro Moros. 18 ‘‘(B) PROHIBITION ON REGISTRATION.— 19 The Commission shall not register under this 20 Act a digital commodity platform that is owned 21 (in whole or in part) by a covered entity. 22 ‘‘(C) REVOCATION OF REGISTRATION.— 23 The Commission shall revoke the registration 24 under this Act of a digital commodity platform 25 VerDate Sep 11 2014 23:27 Jun 26, 2023 Jkt 039200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S1870.IS S1870 pbinns on DSKJLVW7X2PROD with $$_JOB 9 •S 1870 IS if a covered entity acquires all or any part of 1 the ownership of the digital commodity plat- 2 form.’’. 3 Æ VerDate Sep 11 2014 23:27 Jun 26, 2023 Jkt 039200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6301 E:\BILLS\S1870.IS S1870 pbinns on DSKJLVW7X2PROD with $$_JOB